Offer in Compromise
Eligibility for an Offer in Compromise
The IRS enforces these penalties to ensure the tax system remains fair and effective. Without consequences for not paying taxes properly, individuals could easily avoid fulfilling their obligations. However, the IRS recognizes that many taxpayers who fail to file or pay their taxes do so unintentionally and offers ways to reduce or eliminate penalties.
For example, first-time offenders may be eligible to have their penalties waived. Additionally, you can apply for penalty relief if you faced reasonable circumstances, such as a family death or serious illness, that made it difficult or impossible to pay or file your taxes.
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Who Qualifies for an Offer in Compromise?
To be eligible for an Offer in Compromise (OIC), you must meet certain requirements.
Most importantly, the IRS will not consider your application unless you have filed all required tax returns and made an effort to pay any necessary estimated taxes. Beyond that, your eligibility depends on factors such as your ability to pay, income, living expenses, and assets.
Generally, the IRS accepts an OIC if it determines that the amount you’re offering is the most it can reasonably expect to collect within a set timeframe using its standard collection methods.
Understanding the Offer in Compromise Process
An Offer in Compromise (OIC) allows you to settle your tax debt for less than the total amount owed. To apply, you must submit the required forms to the IRS along with a $205 application fee.
You can propose an OIC using either a lump sum or a periodic payment plan. If opting for a lump sum, you must include an initial payment of 20% of your offer amount with your application. If choosing periodic payments, you’ll make an initial monthly payment and continue making payments while the IRS reviews your offer, until a decision is reached.
Steps to Apply for an Offer in Compromise
To apply for an Offer in Compromise (OIC), you must submit the required IRS forms, detailed financial documentation, an application fee, and an initial payment. The IRS has up to two years to review your application. If no decision is made within that timeframe, your offer is automatically accepted.
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Diam finibus facilisi nisl rhoncus primis iaculis. Lorem morbi finibus bibendum elementum mauris semper facilisis ex? Nullam tempor sed ex habitasse; sem mauris ornare varius. Habitant congue inceptos duis blandit, dapibus sodales facilisi. Porttitor nam fusce fringilla arcu
Diam finibus facilisi nisl rhoncus primis iaculis. Lorem morbi finibus bibendum elementum mauris semper facilisis ex? Nullam tempor sed ex habitasse; sem mauris ornare varius. Habitant congue inceptos duis blandit, dapibus sodales facilisi. Porttitor nam fusce fringilla arcu
